The Zions Bank CAI fell this month primarily because of lower expectations for the trajectory of the economy. In particular, Utahns’ expectations for both business conditions and household income downgraded slightly from April to May. The percentage of Utahns who think business conditions will be better six months from now declined from 31 percent to 29 percent, while the percentage of Utahns who think business conditions will be worse six months from now increased from 6 percent to 10 percent. The percentage of Utahns who expect their household income to be lower six months from now increased to 8 percent from 4 percent, while the percentage of Utahns expecting their household income to be higher six months from now remained at 30 percent. Consumer attitudes were mixed with regard to the labor market, as those expecting more jobs in the next six months declined from 30 percent to 28 percent, but those expecting fewer jobs also declined, moving from 14 percent to 13 percent.
Utahns became less concerned about inflation this month. The percentage of Utahns who expect prices for consumer goods to increase over the next 12 months declined to 77 percent from 84 percent. Very few consumers expect prices to go down; the percentage of Utahns expecting prices to decline was 0.2 percent. But the percentage of Utahns who think prices will stay the same now stands at 22 percent, up from 15 percent. This is likely why Utahns are also less worried about inflation deteriorating their household income. The percentage of Utahns who think their household income is likely to increase by more than the rate of inflation during the next two years increased to 26 percent from 22 percent last month.
Similarly, fewer Utahns think interest rates will continue to move higher in the coming months. Those expecting rates for borrowing money to go up over the next 12 months declined to 61 percent from 66 percent, and those expecting interest rates to stay the same increased from 26 percent to 32 percent. This expectation likely reflects current interest rate trends. The average 30-year fixed rate mortgage decreased to 4.33 percent last week, which is the lowest rate since November 2013, according to the Mortgage Bankers Association. Decreasing, or, at a minimum stabilizing interest rates, could help the economy continue to improve, as last month retail sales edged up only 0.1 percent. Retail sales were weaker than expected in April because of a decline in receipts at furniture, electronic, and appliance stores. These large-ticket items are often purchased with credit, and declining interest rates will make these items more affordable for consumers. This principle was reflected in Utahns’ attitudes this month, as the percentage of Utahns likely to purchase a major item (e.g. furniture, appliances) increased to 29 percent from 25 percent.
“Consumer attitudes dipped slightly this month as Utahns tempered their enthusiasm about the state’s economic trajectory,” said Scott Anderson, president and CEO of Zions Bank. “Before we become too concerned, though, let’s remember that consumer attitudes are still near historic levels. We have a remarkably low unemployment rate, and our housing market is thriving. This is merely a bump in the road, and we expect attitudes, and subsequently the state’s economy, to continue to march higher in the coming months. ”
Southern Utah Economic Landscape: Iron and Washington County
The unemployment rate for Washington County increased 0.1 percentage point to 4.8 percent in April, according to the Utah Department of Workforce Services. Washington County’s unemployment rate lies above the state average of 3.8 percent but well below the national average of 6.3 percent measured in the same period. The most recent report from RealtyTrac® shows that approximately 21 in every 10,000 homes were in foreclosure in Washington County in April, the highest foreclosure rate in the state and an increase from seven in every 10,000 one month prior.
The unemployment rate in Iron County remained constant at 4.9 percent in April, according to the Utah Department of Workforce Services. In the same report by RealtyTrac®, approximately four in every 10,000 homes were in foreclosure in Iron County in April, a decrease from seven in every 10,000 one month prior.
Grifols has announced that it will build a new plasma collection center in Cedar City. Grifols is a biopharmaceutical company that manufactures medicine from human plasma. Company officials expect to employ 65 people when the center is in full operation. The plasma collection center could contribute as much as $4 million to Cedar City’s economy in terms of payroll, donors’ time compensation, and purchases made to run the center. Cedar City is a strong location for a plasma donation center—with Southern Utah University close by, the local economy will benefit more than just monetarily. Grifols is planning to work with SUU to provide vocational training and enhance current training offered to phlebotomy students at Southwest Applied Technology College by offering hands-on, practical experience.
Zions Bank provides the CAI as a free resource to the communities of Utah. The monthly CAI summary reports are released at a monthly press conference, coinciding with The Conference Board’s national CCI release date. The reports are available online at www.zionsbank.com/cai. Analysis and data collection for the CAI are done by The Cicero Group, a premier market research firm based in Salt Lake City. The June CAI will be released during a press conference on June 24, 2014.
Zions Bank is Utah’s oldest financial institution and is the only local bank with a statewide distribution of financial centers, operating 101 full-service centers. Zions Bank also operates 26 full-service financial centers in Idaho. In addition to offering a wide range of traditional banking services, Zions Bank is also a leader in small business lending and has ranked as the No.1 lender of U.S. Small Business Administration 7(a) loans in Utah for the past 20 consecutive years. Founded in 1873, Zions Bank has been serving the communities of Utah for more than 140 years. Additional information is available at www.zionsbank.com.